As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.
Trade Alert – (SPY)- BUY
Buy the S&P 500 SPDR?s (SPY) March, 2016 $201-$204 in-the-money vertical bear put debit spread at $2.60 or best
expiration date: March 18, 2016
Portfolio weighting: 10%
Number of Contracts = 39 contracts
You can pay all the way up to $2.70 for this spread and it still makes sense.
I think we are going to struggle here around the 50-day moving average. We may get one more false upside breakout.
However, the winning tactic here has been to sell every $6 handle rally, and buy every $6 handle dip.
If you can?t do options stand aside. The (SPY) is too low to initiate a new outright short position.
Your turn to trade will come, but it is not right now.
I am being very careful and devious with my strikes here.
We are not reentering a new bull market in stocks anytime soon, certainly not in the next three weeks.
We have to allow more time to for the bears to fully discount a recession that isn?t going to happen, and then realize they are horribly wrong.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of optionshouse.
If you are uncertain on how to execute an options spread, please watch my training video on ?How to Execute a Vertical Bear Put Debit Spread? by clicking here at https://www.madhedgefundtrader.com/ltt-executetradealerts/. You must me logged into your account to view the video.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don?t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Buy 39 March, 2016 (SPY) $204 puts at????.?.??$10.60
Sell short 39 March, 2016 (SPY) $201 puts at.????..$8.00
Potential Profit: $3.00 – $2.60 = $0.40
(39 X 100 X $0.40) = $1,560 or 1.56% profit for the notional $100,000 portfolio